High Limits on Credit Cards?

[HLAuburn]

Between me and my husband, we have several credit cards. We normally put all our "every day" spending on our Disney Visa for points and we pay it off every month. We had some car expenses recently and I put them on another card, and when I signed on to pay for it, I noticed we have a high spending limit, like over $13,000. If the limit is similar on all our cards, that's a lot of "potential debt".

So my questions are: how big of an impact does that have on your credit? Can you call and ask the card company to reduce your limit or is that even a good idea? Maybe leave one with a higher limit and reduce the rest? Or should I cancel one or two that I never use? (I think I remember reading that's bad too )

It's not that it's a tempatation or anything like that. I just don't want to to reflect poorly on our credit that we have the "potential" to charge up a lot of debt, even if we've never used it.

Any advice? Thanks!

 

[girli565]

I don't see that as a problem and I would not call to lower your limit. I have a card that has a $10k limit that we use for points and pay off every month, and they just keep upping the limit. We're not tempted, but it's nice to have come a rainy day.

 

[Handbag Lady]

Keep them where they are and never call to reduce the amount of credit they would give you. You want that number higher, not lower.

They give you a higher limit because of your credit-worthiness, not because they think that you will go in an use it all up. It helps your credit to debt ratio as well.

 

[quikah]

A higher limit is a good thing, unless you have self control issues.

Your credit score is calculated in part by your credit utilization. so if you have $2000 of debt, but a $13000 limit you will have a higher score than if you only had a $4000 limit.

 

[a1tinkfans]

I would not cancel cards. It dings your credit rating. Your total credit limits versus your actual debt is your credit worthiness. Your talking about debt to credit ratio. if you look at credit card forum dot com and do a quick search, youll be able to understand it better than I can explain it. But YES, having high credit lines does affect your credit score if you also have debt..ie cc or mortgage, car loans etc etc...

 

[miztressuz]

part of what impacts your credit is your debt to credit ratio. basically how much debit do you carry versus how much credit have you been extended. so unless you have the temptation to use it, i would never, ever, request a reduction to your credit. not unless they start changing how the credit ratings are calculated.

here's a good article on the experian site
http://www.experian.com/ask-experia...r-credit-limits-could-hurt-credit-scores.html

 

[lovesmurfs]

Between me and my husband, we have several credit cards. We normally put all our "every day" spending on our Disney Visa for points and we pay it off every month. We had some car expenses recently and I put them on another card, and when I signed on to pay for it, I noticed we have a high spending limit, like over $13,000. If the limit is similar on all our cards, that's a lot of "potential debt".

So my questions are: how big of an impact does that have on your credit? Can you call and ask the card company to reduce your limit or is that even a good idea? Maybe leave one with a higher limit and reduce the rest? Or should I cancel one or two that I never use? (I think I remember reading that's bad too )

It's not that it's a tempatation or anything like that. I just don't want to to reflect poorly on our credit that we have the "potential" to charge up a lot of debt, even if we've never used it.

Any advice? Thanks!

I personally would cancel one or more -- In the event that you want to apply for credit (car, mortgage), you could be denied because of the potential credit risk. If something catastrophic happens to you or your family and you started to ring up debt, your potential total debt load could be of concern to potential lenders.

 

[gwynne]

Between me and my husband, we have several credit cards. We normally put all our "every day" spending on our Disney Visa for points and we pay it off every month. We had some car expenses recently and I put them on another card, and when I signed on to pay for it, I noticed we have a high spending limit, like over $13,000. If the limit is similar on all our cards, that's a lot of "potential debt".

So my questions are: how big of an impact does that have on your credit? Can you call and ask the card company to reduce your limit or is that even a good idea? Maybe leave one with a higher limit and reduce the rest? Or should I cancel one or two that I never use? (I think I remember reading that's bad too )

It's not that it's a tempatation or anything like that. I just don't want to to reflect poorly on our credit that we have the "potential" to charge up a lot of debt, even if we've never used it.

Any advice? Thanks!

As long as you're responsible with it, it's not a problem. As you probably know, high limit is relative. There are lots of folks with much higher limits.

Keep them where they are and never call to reduce the amount of credit they would give you. You want that number higher, not lower.

They give you a higher limit because of your credit-worthiness, not because they think that you will go in an use it all up. It helps your credit to debt ratio as well.

Great advice.

I personally would cancel one or more -- In the event that you want to apply for credit (car, mortgage), you could be denied because of the potential credit risk. If something catastrophic happens to you or your family and you started to ring up debt, your potential total debt load could be of concern to potential lenders.

Not so good advice, assuming OP is responsible. The cancellation is not looked at in a particularly favorable light...

 

[FreeTime]

I work for a large credit card issuer.

I would not cancel the cards.
I would not request a lower limit.
You will not be dinged as having too much open in credit if you apply for a car, etc. Just show evidence where you pay them off.
You need to revolve a couple of times a year to help increase your credit score. Some banks won't report your payments (they will just report that you always have a $0 balance) so it looks like they aren't active.

 

[Marionnette]

I personally would cancel one or more -- In the event that you want to apply for credit (car, mortgage), you could be denied because of the potential credit risk. If something catastrophic happens to you or your family and you started to ring up debt, your potential total debt load could be of concern to potential lenders.

30% of your credit score is based on your debt-to-credit ratio. When you close an account with a high limit, you raise that ratio. This has a negative effect on your overall credit score.

Take a look at this article in Reuters:

"You can't have 'too much credit,' but you can utilize too much credit," says Anthony Sprauve, a spokesman for FICO, the company that calculates the leading credit scores. "Credit utilization (amounts owed as a percentage of available credit) counts for 30 percent of a person's credit score. The more of someone's available credit they are using the bigger negative impact on their credit score."

 

[RitaE]

$13,000 really isn't considered a high limit on a card. Several of them will issue in the $35 to $40k range.

 

[chicagodisneyfan]

I have three credit cards - 20,000 limit, 30,000 limit and 50,000 limit. Have a high credit score so I do not think having high limits impact the score.

Use them enough to keep the limits high - but rarely keep a balance. OK - I bought a new car once and charged it.

 

[HLAuburn]

$13,000 really isn't considered a high limit on a card. Several of them will issue in the $35 to $40k range.

I guess it's all relative, but if we have 7 cards with limits of $14K and up, that's a lot of potential debt, at least in my opinion. I could see where it might not be too favorable that I couldgo crazy and charge up $100,000 on whatever I wanted at any time! But as long as I don't actually charge anywhere near that and I'm paying on time, I guess I'm good.

Thanks everyone for the advice!

 

[I loveStitchnippyjon]

I got my first cc in college with a $300 limit. I've kept that card ever since, and the cc company has gradually increased my limit, even though I don't routinely use the card. I joke to my DH that i could now buy a new car on my CC if I wanted to!

 

[scrapquitler]

Between me and my husband, we have several credit cards. We normally put all our "every day" spending on our Disney Visa for points and we pay it off every month. We had some car expenses recently and I put them on another card, and when I signed on to pay for it, I noticed we have a high spending limit, like over $13,000. If the limit is similar on all our cards, that's a lot of "potential debt".

So my questions are: how big of an impact does that have on your credit? Can you call and ask the card company to reduce your limit or is that even a good idea? Maybe leave one with a higher limit and reduce the rest? Or should I cancel one or two that I never use? (I think I remember reading that's bad too )

It's not that it's a tempatation or anything like that. I just don't want to to reflect poorly on our credit that we have the "potential" to charge up a lot of debt, even if we've never used it.

Any advice? Thanks!

All of our cards have high limits on them. One time when we were first married (about 20 years ago) we applied for a car loan and were declined because we had 'too much available credit' {and no balances on the cards} so we called the credit card companies and asked them to lower our limits, which they did, then we reapplied for the loan and were approved. I don't know if the available credit thing will ding you anymore, but I do know that if you have a balance that is more than like 50% of your available balance you can get dinged for 'high utilization rate', so I guess if you have too much available it can be bad, and if you use what is available that can also be bad....in short, I don't worry about it because it's a no win situation

 

[Planogirl]

I have heard occasionally that a lender will ask about potential debt when they see a lot of high limits but I don't think that that is the norm. Some lenders will be nitpicky about everything.

Make sure that you occasionally use anything you want to keep open. Lenders can close accounts due to lack of activity. Also, if you decide to close anything try to keep the older accounts open. Many lenders like to see older, well-established accounts.